International Monetary Fund and World Trade Organization

WB, IMF & WTO

Neocolonialism according to the Free Dictionary (2011) is the application of a policy where a major power utilizes the political and economic power to continue its influence on the less developed nations. It also entails the control of politics of a country that in theory is sovereign and independent through the domination of its economy. It can as well be referred to as the exploitation of weaker nations by the stronger nations and using their resources to enrich and strengthen the stronger countries.

It is this exploitation that is perpetuated by the neocolonialism that makes the poor countries to continue being poor as the little resources that are available are taken away through various agreements that bind the poor countries to the powerful countries. There are aids that are brought into the poor countries bearing the fact that they cannot sustain themselves and in return, their resources are explored and shipped away.

The World Bank (WB) and International Monetary Fund (IMF) have always been extending financial loans to poor countries but these have not bee of much help to the purported 'beneficiaries' due to several reasons. The aid comes with unfair conditions like a mandatory increase in the tax rates that will ultimately make life more difficult for the citizens in general like was the case in Albania where the IMF was pushing for the increase in the flat tax rate from the 10% to a possible 12% to 15% (Daniel J. Mitchell, 2011).

The money by the WB and the IMF also does not help the poor nations since there is money brought in but there is no education on how to invest this money. The end result is that the financial aid that is brought in gets wasted and no one benefits from it at all. This fund can only produce good results under condition that there is sufficient civil education to help them invest it well.

The money given to these countries also attract a huge amount of interest rates from WB and IMF. These interest rates are prohibitive since these poor countries cannot afford to pay back at such rates bearing the fact that the returns from investing such money are minimal.

The other factor that makes the funds from IMF and WB not benefit the poor nations is the repayment period that is usually very short. The countries are forced to hastily try to invest the money in a bid to beat the deadline hence ending up wrongly investing the money and being unable to beat the deadline, or if they do, then they remain with no tangible profits. The other danger tied to the repayment period is that in a situation where the due date is not met, then the country faces monumental fines.